2009 Corporate and Environmental Sustainability Survey

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2009Corporate & environmental

sustainability survey


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BDO Kendalls is a national association of separate partnerships and entities.Liability limited by a scheme approved under Professional Standards Legislationother thanfor the acts or omissions of nancial services licensees.This publication is issued exclusively for the general information of clients and staff of BDO Kendalls.

2009 BDO REF0705ISBN 978-0-9806479-4-5


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Table of contents

Executive summary 2Methodology 3

The journey to sustainability 4The environmental future of Australia 4Opportunity in environmentalism 4The quadruple bottom line:

economic, environmental, social, governance 5

Economic factors 6Performance: the driver for sustainability 7Difculties with justication of expense 8Lack of strategic direction 9

Social factors 10Stakeholders and society 10Size and position changes priorities 11

Lack of understanding an issue 11Environmental factors 12

Disparity throughout the organisation 12Self awareness a problem 13

Governance factors 14Embedding sustainability 14

What does this mean? 17

Contributors 19Effective Governance 19BDO Kendalls 19

References 20


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EXECUTIVE SUMMARY

Executive summary

48%

22%

13%

17%

Companies are now aced with environmental and economic challenges that wouldhave seemed unimaginable only a ew years ago. With a global fnancial crisis that hassent the world's economy into recession, the current ocus on the fnancial challenges o

the situation is problematic. Ignoring looming problems o water, waste, energy, climate,biodiversity and overpopulation has the potential to induce a series o crises, damagingour lives and livelihoods more than any banking meltdown. Organisations are respondingby reinventing themselves, becoming sustainable rom environmental, humanistic andfnancial perspectives. Such steps are necessary, not only or organisational longevity,but to protect the livelihoods o uture generations.

Previous studies into corporate sustainability attitudes in Australia have ocused onawareness o the environmental issues and how organisations are responding togovernment roadmaps or action such as the Carbon Pollution Reduction Scheme(CPRS), National Greenhouse and Energy Reporting System (NGERS), and Federaland State legislation.

The 2009 Corporate and Environmental Sustainability Survey was developed toimprove understanding o what motivates organisations to become sustainable, not

just economically, but rom the perspective o environmental, social and governancedrivers. The survey also questioned the barriers that organisations ace: rom the

technical perspectives o analysing and monitoring an organisation's environmentalootprint and per ormance; to justi ying expenditure on sustainable initiatives;

developing an organisational strategy or ac tion; improving the governance structures o the organisation; and communicating progress and achievement with internal andexternal parties.

The survey made a number o observations in relation to what is motivating companies to act. Organisations indicated (Chart 1), that making fnancial gain rom sustainability investments was most important; translating these investments into competitiveadvantage by developing a unique value proposition and increasing the e fciency ande ectiveness o operations.

For the remaining motivators, social rated higher than environmental, serving as areminder that sustainability is about both human and environmental actors. Within

environmental drivers, organisations are primarily motivated by reducing energy consumption and waste. Social drivers are also fnancially motivated. Organisationswant to utilise sustainability initiatives to improve their standing with stakeholders.Governance drivers (rating ourth) show that organisations are primarily looking atmeeting their mandatory regulatory requirements.

Although organisations are motivated to improve the sustainability o their organisations, the data indicates that they are aced with barriers rom the outset. As evidenced

Chart 1: Respondents' number onemotivator for sustainability initiativesin their organisation.

EconomicEnvironmental

Governance

Social


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in Chart 2, the frst barrier to improving the sustainability o their organisations was justi ying the time, money and e ort required. The second barrier was analysis, indicating that organisations ace di fculties in calculating how they impact the environment andcommunities within which they operate. This prevents organisations rom fndingdirection or prioritising sustainability initiatives. The remaining barriers were: strategic,monitoring, governance, and communication.

In summary, the survey results show that organisations are motivated by pressingfnancial concerns and that justi ying expenses in sustainability can be di fcult. By

increasing our knowledge o what motivates organisations and what prevents themrom undertaking initiatives to improve their environmental, social and governanceper ormance, programs can be developed which not only improve the sustainability o the organisation, but satis y decision makers that their fnancial uture is not only assured, but potentially enhanced.

MethodologyThe survey was conducted in April/May 2009 and was distributed electronically toparticipants throughout Queensland. The number o respondents totalled 188. Resultswere classifed into a number o industry groups.

Table 1: Respondents by industry

INDUSTRY GROUP NUMBER OF RESPONDENTS

Pro essional services 57

Health and science 18

Education and non-proft 10

Manu acturing 10

Primary industries 9

Tourism services 3

Government 3

Transportation 1

Not indicated 77

Grand total 188

The survey was distributed to a number o levels within the organisations targeted to gain an understanding o the di erences in opinion between sta , executives, anddirectors o organisations.

22%

6%

20%

30%

9%

Chart 2: Respondents' number one barrier to investing in sustainability initiatives inorganisations.

Strategic barriers

Monitoringbarriers

Justifcationbarriers

Goverance barriers

Communication barriers

Analysis barriers

21%

41%

20%

18%

Chart 3: Respondents by position

Executive

Other

Sta

Director

The highest rated motivator, aggregated for all organisations withinall industries, was economic, followed by social, environmental

and governance.

13%



The journey to sustainability

THE CORPORATE SUSTAINABILITY SURVEY 2009

On December 3, 2007 Australia signed the instrument o ratifcation o the Kyotoprotocol, coming into e ect on March 11, 2008.1 Australias ratifcation le t the UnitedStates as the only Annex I nation still to rati y the protocol. In addition to signing theprotocol, Australias Carbon Pollution Reduction Scheme (CPRS) will come into e ect

July 1, 2011 with a target o reducing Australias emissions to 25% below 2000 levelso 552,680.48Gg CO2

2 by 2020.3 Less than 10% o greenhouse emissions are directly attributed to households, 4 the vast majority o Australias greenhouse gases coming

rom business and industry.

The environmental uture o AustraliaModelling by the CSIRO or the Australian Greenhouse O fce5 indicates that Australiawill undergo some degree o climate change over the next 30 to 50 years regardless o national or international e or ts to decrease emissions. Some changes that are predictedare: increase in annual national average temperatures o between 0.4 and 2.0C by 2030; more heatwaves and less rosts; rain all reductions; increased wind speeds incyclones; and an increase in severe weather events, increasing the likelihood and severity o storms and bushfres.

The cost o these changes will vary across industries, but agriculture, which contributes3% o the GDP, can expect to be heavily hit . For example droughts in 2002-2003 causeda reduction in output o 19%, reducing GDP by approximately 1% in the same year. 6

Severe weather events can also have massive costs to the economy. The 2009 Victorianbushfres illustrate the massive human and economic costs o these extreme events,with 173 people losing their lives and 2029 homes destroyed along with 61 businesses,fve schools and kindergartens, three sporting clubs and numerous other buildings. Thecost or cleanup relie and rebuilding by the Australian and Victorian Government willbe in the billions. In general, the Emergency Management Australia database indicatesan upward trend in the number and cost o natural disasters in Australia, 7 potentially making it impossible in the uture or the insurance industry to cover the costs o naturaldisasters,8 increasing risk and volatility in the Australian economy.

Opportunity in environmentalismFor some industr ies and economies, reaching compliance will have an associated fnancialcost. Globally, the Stern Report predicts that the cost o reducing emission growth tostabilise CO2 levels at 450ppm, the fgure which limits environmental damages romclimate change to acceptable levels, will cost 1% o global GDP. However the cost or ignoring climate change would reach 5% o GDP, possibly increasing to 20% i moredramatic predictions occur. 9

It is amazing the commitmentthat people feel toward our focus on sustainability andthe environment.

Vivienne Cox, BP vice president for marketing



Signing the Kyoto protocol has allowed Australian businesses to take par t in internationalcarbon markets, 10 reported by the World Bank to be valued at $30 billion in 2007.These markets are growing ast , the $30 billion fgure is up 50% rom 2006 and triple itsworth rom 2005 ($11 billion).11 Opportunities exist in almost all industries or productsand services that are more sustainable, the Stern Report indicated that the market or low-carbon technologies could reach $500 billion by 2050. 9

Equity markets re ect these opportunities directly in the amount o money investedin socially responsible investments (SRI). The Sustainable Investment Research Institute

(SIRIS) state that the total amount o money under management in Australia by SRI undsincreased by 3587% in the past six years (2003-2008) to $11.98 billion, the Europeanmarkets are estimated to total 1 trillion and nearly 10% o the $24.4 trillion (AUD) o US assets has some orm o sustainable screening process.12

The quadruple bottom line:economic, environmental, social, governanceFor organisations to be truly sustainable, they must achieve success using multiplemeasures beyond the domains o fnancial per ormance. The quadruple bottom line(QBL) approach suggests organisations become accountable rom an economic,environmental, social and governance perspective:

Economic - traditional measures, market and fnancial per ormance;Environmental - the natural environment, air, water, natural resourcesand biodiversity;Social - human actors such as cultural and ethnic diversity, employee and sa ety issues and public interest; andGovernance - rameworks and processes organisations have in place or theoversight, verifcation and measurement o sustainability programs and data.

The 2009 Corporate and environmental sustainability survey (the results o which arepresented in this document) was designed to measure how the di erent dimensions o

the quadruple bottom line motivate organisations when considering making investments to improve the sustainability o their organisation. Additionally, to understand what

stops organisations rom making these investments, a number o questions aroundbarriers were asked, splitting these into six dimensions o a sustainability li ecycleapproach: justi y, strategise, analyse, monitor, govern and communicate. Thesedimensions are explained in Figure 1.

The number one barrier for organisations wishing to undertakesustainability initiatives overall was justication. This was followedby analysis, strategic, monitoring, governance and communication.

S t r a t e

g i

s e

C o m

m u n i c

a t e J u s t i f y

S t r a t e

g i

s e G

o v e r n

A n a l y

s e

M o n i t o r

Figure 1: The Sustainability lifecycle.

Sharing in ormationwith communities and

stakeholders

Developingplans or sustainability

initiatives within theorganisation

Making thebusiness case or

sustainability

Maintainingvigilance on activitieswith regards to thequadruple bottom

line ramework

Measuringthe current

environmental andhuman impact o the

organisation

Ensuring thatsustainabilityinitiatives are managedin an e ective,transparentmanner



ECONOMIC FACTORS

Economic factors

With the economic crisis impacting most organisations, it is not surprising that the highest ranked driver or organisations to implement a corporate and environmentalsustainability program was economic. As indicated in Chart 4, this fnding wasconsistent across industry, organisation size and the role o the respondent within

the organisation.

Key fndings83.5% o respondents agreed that

the development o unique valueproposition was a key motivator 77.1% o respondents agreed thatincreased competitive advantagewas a key driver

Justifcation o sustainability programs was indicated as thenumber one barrier overall55% o organisations ound

that not having a clear processor developing strategies or

sustainability was an issue55.7% o organisations werenot aware o governmentcompensation sources that wereavailable to support initiatives

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%Education andNot- or-proft

Health &science

Manu acturing Primaryindustries

Pro essionalservices

Economic Environmental GovernanceSocial

Chart 4: Percentage of respondents from industry groupings indicating the number onemotivator for initiating corporate and environmental sustainability initiatives.



Table 2 shows the economic attributes that respondents are seeking with their investments in their sustainability programs:

Table 2: Economic benet sought from sustainability initiatives

MOTIVATING FACTOR YES NO NEITHER

Development o a unique value proposition or our clients 83.5% 2.1% 14.4%

Increased e fciency in our operations 81.8% 7.1% 11.1%

Increased e ectiveness in our operations 81.0% 6.0% 13.0%Increased competitive advantage over our competitor s 77.1% 5.2% 17.7%

Exposure to new markets or our products and services 73.4% 10.6% 16.0%

Lower operating costs or our products and ser vices 66.7% 15.2% 18.2%

To gain fnancial benef t rom the new carbon economy 44.3% 18.2% 37.5%

Per ormance: the driver or sustainabilityThe economic attributes used to determine an organisations imperative to implement acorporate and environmental sustainability program can be assessed in terms o internaland external drivers or that particular organisation. While both will ultimately impact

the organisations bottom line, the internal drivers are about improving e ectivenessand e fciency within the organisation, while the external actors are about creating acompetitive advantage in the marketplace (unique value proposition, new markets).

While all actors were seen as important by most respondents, the results in Table2 show that development o a unique value proposition or clients rated highest o all attributes. With opportunities to engage in carbon trading in Australia increasing,respondents were less inclined to seek direct fnancial beneft rom the carbon economy.It is unclear whether companies are looking more or fnancial savings rom e fciency gains as opposed to external carbon markets and the opportunities they present. It ispossibly too early or organisations to incorporate carbon trading and hedging strategiesas they currently do with energy.

Goran Lindahl, ABB CEO

Sustainability not only helpsimprove the world, but alsoenergizes the company.



Di fculties with justifcation o expenseAlthough the economic motivation is clear, organisations still ace di fculty justi yingexpenditure in sustainability programs. Data presented in Table 3 shows that internalproblems, such as a lack o a clear vision, and no process to embed sustainability prevent development o sustainability, approaches that contribute systemically to

the organisation. Similarly, perceived risks associated with developing programscome rom not understanding time and fnancial costs, and the uid nature o theregulatory environment at present. A point to note is that although there are increasinggovernment resources available or sustainability, organisations are not aware o their

existence. For example, the Queensland Sustainable Energy Innovation Fund (QSEIF)administered by the Queensland EPA assists Queensland based organisations to developinnovative technologies that reduce consumption o ossil uels, water or greenhousegas emissions.

Table 3: Justication barriers present in organisations for sustainability initiatives

BARRIER TO ACTION YES NO NEITHER

Not having a clear vision or objectives to be obtainedrom sustainability 59% 30% 11%

Not being aware o government compensation sourcesavailable to support initiatives 56% 24% 20%

Not ully understanding the process to embedsustainability within our organisation 24% 24% 22%

Not ully understanding the time and costs or beneftsassociated rom implementing sustainability initiatives 54% 33% 14%

Belie that the regulatory environment or sustainability isstill too uid 47% 21% 32%

Not ully understanding what the business drivers are or us rom sustainability 43% 45% 13%

Not ully understanding the risks associated with climate

change on our organisation38% 43% 19%

Not having buy-in rom our board on sustainability 23% 55% 22%

ECONOMIC FACTORS

Lord Browne, 2004, Former Chairman BP

To be sustainable a companycannot exist in isolation butmust recognize and manageits wider impact and itscontribution to society.



Lack o strategic directionStrategically, the core activities o developing sustainability programs and translating

them into action are the biggest barriers to engagement. Organisations fnd di fculties indeveloping a clear business case or their programs and articulating vision or objectives.Similarly, as indicated by Chart 5, organisations fnd di fculties in developing strategies

or sustainability. As justifcation o sustainability initiatives was listed as the mostimportant barrier, not knowing the strategic benefts organisations can achieve throughsustainability initiatives, such as access to carbon markets, would increase di fculties in

justifcation.

IAG is one o Australias largest general insurance groups. In 2003 it initiated a programto acilitate the attainment o sustainability as an agreed purpose and a shared goalacross the organisation. IAG understood that they needed to consider all aspects o itsimpact on society and to respond to the loss o community trust in the banking and insurance industry. Furthermore, reducing crime in the community and reducing theimpacts o climate change, results in ewer claims and has a positive impact on IAGsfnancial position. Hence the business case revolved around building social capital and maintaining their social licence to operate.

Case study from Suzanne Benn and Dexter Dunphy, Corporate Governance andSustainability Challenges for theory and practice, Routledge, 2007

Increased e fciency in our operations

Chart 5: Not having a clear process for developing strategies for sustainability is abarrier to their development.

82%Yes

11%Neither

7%No

Increased e ectiveness in our operations

81%Yes

13%Neither

6%No



SOCIAL FACTORS

Social factors

Overall, respondents rated social actors as the second most important motivator or their sustainability initiatives. Organisations are seeking to improve relations with

all stakeholders and to improve their reputation. It is evident that motivations or sustainability are more humanistic than environmental, this observation hints thatpleasing stakeholders and gaining the associated competitive advantage drivesorganisations more directly than improving environmental per ormance.

Stakeholders and societyAll o the social drivers assessed connect internal and external stakeholders to anorganisation: community, sta , clients, etc. The results (Table 4) showed the driver enhanced reputation with all stakeholders is the highest rating.

Table 4: Respondent data overall for social drivers for sustainability


Enhanced reputation with all stakeholders 94% 1% 5%

Meeting the sustainability expectations o our clients 93% 2% 5%

Meeting the sustainability expectations o our own people 88% 3% 9%

Providing a respected and socially responsible working environment 87% 2% 11%

Meeting the sustainability expectations o our community 84% 7% 9%

Increased ability to attract and retain new and valued employees 77% 5% 18%

Internally, meeting the expectations o the organisation's people, ability to attractand retain employees, and the ability to provide a respected and socially responsibleworking environment, rated highly. Externally, respondents' agreed that meeting thesustainability expectations o the community (84%), clients (93%) and stakeholders(94%) in general. Satis ying internal stakeholders does not rate as highly as external,possibly due to external stakeholders' direct commercial impact.

Key fndings94% o respondents agreed thatenhanced reputation with allstakeholders was a key driver 93% o respondents agreed

that meeting the sustainability expectations o clients wasa key driver Medium to large organisationssee social drivers as the secondmost motivating actor inestablishing a sustainability management program

Jim Copeland Jr., former CEOof Deloitte Touche Tohmatsu

The best professionals inthe world want to work inorganizations in which theycan thrive and they wantto work for companiesthat exhibit goodcorporate citizenship.



Size and position changes prioritiesMedium to large organisations rated social drivers as the second highest motivating

actor or investing in sustainability (Chart 6). This is re ected in the individual responsesby CEOs, COOs, and directors rating social drivers as the second highest motivating

actor. Small organisations di ered, rating social drivers third behind environmentaldrivers. This can be attributed to lower public profles o smaller organisations and,

there ore, lower expectations in the community.

Lack o understanding an issueResponses to the analysis barriers that organisations are aced with regarding sustainability are collected in Table 5. From this data, a lack o understanding can be seen about whatstakeholders, i.e. clients, suppliers, community and sta , expect rom the participantorganisations. Without knowledge o these expectations, directing investment toimprove per ormance in meaning ul ways becomes more di fcult.

Table 5: Respondent data overall for analysis barriers for sustainability

ANALYSIS BARRIER YES NO NEITHER

Not ully understanding what our community expectsrom us in relation to sustainability 49.4% 35.4% 15.2%

Not ully understanding what our clients expect romus in relation to sustainability 46.2% 30.8% 23.0%

Not ully understanding what our own people expectrom us in relation to sustainability 45.0% 32.5% 22.5%

Chart 6: Organisational size has a directrelation to prioritisation of social factors

55%Economic

17%Social

25%Environmental

3%Governance

Small

43%Economic

25%Social

18%Governance

14%Environmental

Medium

43%Economic

26%Social

20%Governance

11%Environmental

Large



ENVIRONMENTAL FACTORS

Environmental factors

Environmental actors rated as the third most important overall. As the economy improves and as government legislation becomes entrenched, ocus on the environmentis expected to increase. Responses in Table 6 indicate that while organisations were notparticularly concerned with their impact on the local environment they were motivated

to improve environmentally when there is clear economic beneft. Organisations arelooking to achieve these economic benefts through waste reduction and reduction inenergy, uel and water usage.

Table 6: Respondent data overall for environmental motivators


Reduce our energy consumption rates 91.7% 2.1% 6.2%

Reduced waste 85.3% 4.2% 10.5%

Reduce our organisational uel usage 76.1% 8.0% 15.9%

Reduce the immediate impact on our local environmentrom our processes and services 75.0% 5.4% 19.6%

Reduced water usage rates 69.2% 5.5% 25.3%

Disparity throughout the organisationTrends emerge when analysing the data or di erent levels within the organisation,as shown in Chart 7. At the levels o sta and directors environmental motivatorsrank second; however, or managers at the CEO, CFO and COO level, environmentalmotivation is replaced with economic motivators. This is possibly due to executiveshaving primary responsibility or reaching the fnancial targets o the organisation.

Environmental SocialEconomic Governance

Director

Executive

Sta

70% 80% 90% 100%0% 10% 20% 30% 40% 50% 60%

Chart 7: Respondents' number one motivator for sustainability at different levels in theorganisation

Key fndings91.7% o respondents agreed that

the reduction o energy usage wasa key driver 85.3% o respondents agreed

that the reduction o waste wasa key driver 75% o respondents agreed thatreducing the environmental impacto processes on the localenvironment was a key driver Economic drivers rated highly across industry type, organisationalsize and respondent role types



Sel awareness a problemChart 8 shows that organisations overwhelmingly agree that they do not ully understand

their current carbon ootprint (emissions o carbon dioxide equivalent). Without thisin ormation, it is di fcult or organisations to understand the investments required tonegate their environmental impacts and, there ore, they do not have a s tar ting point todevelop ongoing initiatives to recti y.

Analysis barriers rated higher or managers and sta than directors and senior executives,possibly due to the act they are responsible or collecting this data and, there ore, can

identi y shortcomings within their respective organisations.

58%

34%

8%

Chart 8: Respondents' who regarded notknowing their carbon footprint as a barrier.

Yes

No

Neither



GOVERNANCE FACTORS

Governance factors

Chart 9: Overall governance motivators for respondents

Neither NoYes 100%0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Not having a knowledge managementapproach to capture data

Not having a process or ongoing trainingand education o our resources

Not having a clear understanding o the process or verifcation o our

sustainability data

Not having a clear understandingo the process or certifcation o our

sustainability approach

Not having a clear governance ramework or oversight o sustainability

Governance actors rated lowest or respondents overall. These drivers primarily relate to legislative, management and accountability issues. Although currently a lowpriority, and as climate change legislation becomes more entrenched, it is possible

that governance issues may become more important. Risk management and meetingfduciary duties were also a key reason or many organisations to introduce governanceinto their management structures. Respondents agreed that all governance drivers wereimportant or investment in sustainability within their organisation (Chart 9).

Non-mandated actors may drive organisations to improve their governance. For

example, social drivers can pressure organisations to introduce accountability and transparency changes. Similarly, satis ying stakeholder requirements is also an importantactor in this area, and this can be seen in the high volume o sustainability reporting

amongst public companies despite limited legislation.

Embedding sustainability

Key fndings81% o respondents agreed thatmeeting mandatory regulatory requirements was a key driver 77% o respondents agreed thatproviding a stronger stakeholder engagement process was akey driver High percentages o respondentswere ambivalent about several o

the drivers i.e. they neither agreednor disagreed that governanceissues were key drivers65% o respondents indicated thatnot having a reporting ramework was a barrier to undertakingsustainability initiatives64% o respondents declared thatnot having a process or monitoringprogress o sustainability initiativeswas a barrier 59% o respondents indicated

that not knowing how to reportwas a barrier

Whilst less than 10% o Directorsound monitoring to be the

number one barrier to undertakingsustainability initiatives, more than30% o the Executive ound it tobe number one, making it the mostcommon or that group



Bernard Wheelahan, Non-ExecutiveChairman; Pacic Hydro

There needs to be a sense of urgency. Its not rocket science.If you cant measure it, youcant manage it and you haveno hope whatsoever of gettingit under control.

Results indicated that sustainability and governance are not ully integrated. When r isk issues are incorporated however, governance has a closer connection. Organisations

ound the lack o a ramework as a major barrier, with 65% o respondents stating this to be the case. This trend, rom Table 7, is more pronounced in the small to mediumenterprise sector, and with larger entities soon having to report using the NGERSreporting ramework (although delayed until 2011), this result is even more signifcant.Another point o interest was that organisations did not ully understand what suppliersare doing in relation to sustainability (55.8%). Without knowledge o upstream activities(suppliers), organisations cannot ully understand what their own impacts are nor repor t

against them.

Table 7: The number one priority for organisations by size

ORGANISATIONSIZE

ECONOMIC ENVIRONMENTAL GOVERNANCE SOCIAL

Large (>500 te) 42.86% 11.43% 20.00% 25.71%

Medium

(100-499 te) 42.86% 14.29% 17.86% 25.00%

Small (



Studying the barriers or sustainability rom a governance perspective (Chart 9) shows that all were seen as barriers with all questions receiving a greater than 60% a frmativeresponse rate in the category o either 'Agree' or 'Strongly Agree'. Not having anunderstanding o the process or verifcation o sustainability data rated as the largestissue within the governance barrier section.

GOVERNANCE FACTORS

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Meeting our fduciary duty

Providing a higher level o assurance to ourstakeholders and regulators

Providing a stronger stakeholder engagement process

Contributing to a comprehensive policy ramework

Reducing our organisational risk exposure

Increasing the transparency o our operations and processes

Meeting mandated regulatory requirements

Chart 10: Overall governance barriers for respondents

Neither NoYes



What does this mean?

The impact that Australian businesses have on the environment is irre utable.Queensland organisations are aware that in addition to fnancial per ormance they need to improve their environmental/social impacts and governance in order to besustainable and maintain their licence to operate rom the communities in which they exist. However, organisations need to learn how to overcome barriers preventinginvestment in the in rastructure, technologies, manpower and expertise required toimprove their sustainability.

Respondents indicated the di fculty in justi ying sustainability investment, so strategies

must be developed to sell sustainability internally. Organisations indicated they arestrongly motivated by economic per ormance and that this mani ests through wantingorganisational e fciency and e ectiveness improvements.

For organisations fnding it di fcult to make larger investments, initial gains can o tenbe made with small investments such as motion detecting light switches, and o tensimple behavioural changes, such as more e fcient driving practices. These gains couldbe collected into a unding pool or uture, larger strategic investments in sustainability.Additionally, there exists many opportunities to access unding rom governmentsources to make sustainable improvements to organisations. However, the data tellsus that companies still require help in identi ying the Federal and State governmentassistance available to them.

It was interesting to discover that organisations rated social and environmentalmotivation almost equal. The social contract given to companies by the communitiesin which they operate means that organisations need live up to their responsibilities inrelation to both human and environmental actors. Organisations need to fnd ways

to improve engagement with stakeholders to meet expectations and improve their reputation.

Responses indicated the di fculties organisations are acing in success ully communicatingsustainability achievements to their communities. But rameworks such as the GlobalReporting Index (GRI) can provide direction to organisations. The added advantageis that these rameworks can give much needed structure to quantitative internalreporting which can address the di fculties that organisations are having in analysing

and monitoring their sustainability initiatives.



It is perhaps telling to recognise the data re ecting the lack o alignment between theexisting corporate governance rameworks and rameworks to ensure oversight o sustainability initiatives. Without this alignment, organisations will lack the structure tonot only identi y the objectives or sustainability, but the process to enable, monitor,report and communicate to stakeholders.

Organisations acknowledge di fculties in linking strategic direction to social andenvironmental actors which is limiting the possible benefts that they can achieve.By avoiding 'one-size-fts-all' approaches, and examining what is unique about their

circumstances, organisations can o ten develop innovative solutions that go beyondenvironmental per ormance, and can open their organisation to new markets andopportunities.



Contributors

Dylan ByrnePartner SustainabilityAdvisory Services(07) 3237 [email protected]

Shad SearsSenior Advisor(07) 3510 8111Shad.sears@e ectivegovernance.com.au

E ective GovernanceE ective Governance provides expertise and assistance to all types o organisationson corporate governance, strategy and corporate sustainability to clients in Australiaand New Zealand. Our team has experience gained over a twenty year period, andour unique approach combines research with prac tical methods to provide real-worldsolutions or clients.

www.e ectivegovernance.com.au

BDO KendallsBDO Kendalls is a business and corporate advisory frm that has the ability to assistorganisations to develop and implement best practice models to improve per ormanceand operational e ectiveness while building trust with key stakeholders and thecommunities in which they operate. The fnancial issues associated with an organisations

journey to sustainability are complex and can be di fcult to implement without specialistknowledge and in many cases will require external verifcation. BDO Kendalls can helporganisations to maximise the sustainability o their organisation, ensure they cover o on any risks and take advantage o the opportunities presented to them.

www.bdo.com.au



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11. The World Bank. State and Trends o the Carbon Market 2007. http: //web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21319781~pagePK:6

4257043~piPK:437376~theSitePK:4607,00.html (accessed June 15, 2009)12. Hanley, Mike. Australian socially responsible investment unds reach 11.98 billion.

In The Greenpages Business Directory 2008/09, by Greenpages. 2008.

13. Quote rom Responding to the Leadership Challenge: Findings o a CEO Survey on Global Corporate Citizenship, white paper, World Economic Forum, Geneva,Switzerland, 2003.


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Documents

2009 Corporate and Environmental Sustainability Survey